THE ANNUAL AGRICULTURAL REVIEW

My Lords, I think that this might be the moment for my noble friend to make a statement on the Agricultural Price Review.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD)

My Lords, with your Lordships' permission, I should like to make a statement similar to that which my right honourable friend the Minister of Agriculture has just made in another place, about the results of the Annual
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Agricultural Review. I will use his own words.

"The industry's forecast net income for 1962–63 adjusted for normal weather is £407 million, compared with £413 million last year and £390 million the year before. The forecast of net output shows a further increase.

"The cost of agricultural support in the Estimates for 1963–64 is £364 million. That figure was put in before this Review but compares with an expected outturn this year of £321 million.

"Turning now to individual commodities, I take first milk, which accounts for nearly a quarter of farm income. The trouble in recent years has come from ever-rising production causing an increasing proportion of milk to be sold at low manufacturing prices thus reducing the return to the producer. Now at last there are signs that the rise in milk production is coming more into line with the rise in consumption of liquid milk. Moreover, the latest returns show a levelling off in the size of the dairy herd and a significant reduction in the number of dairy heifers in calf. We are therefore raising the guaranteed price for the standard quantity of milk by ½d. a gallon. An increase of this amount should not stimulate further excess production. Any greater increase would involve this risk. The higher price will be of particular benefit to many small farmers who rely on the milk cheque for much of their income.

"With beef, mutton and lamb, production is running at broadly the same level as last year and for most of the year market prices have been higher. The guaranteed prices for fat cattle, sheep and wool will be left unchanged.

"Pig production, however, has risen to a very high level which has depressed the market price and caused a big increase in the cost of support. At the 1961 Review we introduced a flexible guarantee arrangement which increased the guaranteed price if there were too few pigs in prospect and reduced the price if there were too many. But the number of pigs has increased well beyond the scale then devised. We are now strengthening the arrangements by extending the scale and making larger price changes at its
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higher and lower ends. The effect of this will be a deduction of 3s. 6d. a score from the basic guaranteed price on the latest forecast of pig numbers instead of the present 1s. 6d., but as marketings fall the price to the farmer will rise again. We are not altering the basic guaranteed price but we are relating it to a higher level of marketings to take account of the upward trend in consumption.

"For all commodities the form of the guarantee arrangements is no less important than the guaranteed price. We are making a number of improvements in the detailed fatstock guarantee arrangements for this year and are giving notice of others. Details of these are given in the White Paper.

"As with pigs, the course we are following for eggs is not to alter the guaranteed price but to adapt the machinery of the guarantee arrangements to ensure that support does not encourage production to a point which undermines the market. We are making new arrangements, the intention of which is to limit the deficiency payment to what would be payable to the Marketing Board in conditions where the market is in reasonable balance. If the average selling price is below this level, a proportion of the loss will initially be borne by the Exchequer though this will be phased out over the years. Provision will also be made for additional payments to the Board if imports rise above a normal level.

"For cereals, production of wheat and barley continues to rise. We are already largely self-sufficient in barley and a high proportion of the wheat crop is having to be sold for animal feed. The trend of market prices is generally downwards. We are reducing the guaranteed price of wheat by 5d. per cwt. and of barley by 11d. per cwt. There will be no change in the guaranteed prices for other cereals.

"The guaranteed price for potatoes will be raised by 10s. 0d. a ton in order to encourage a further increase in acreage which is at present on the low side. There will be no change in the guaranteed price for sugar beet.

"As regards production grants, we intend to reduce the fertiliser subsidy by £2 million. New schemes are being
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introduced to encourage the production of winter keep in livestock-rearing areas and the renovation of permanent grassland. We propose to reduce the rate for the main ploughing grant from £7 to £5 per acre.

"To sum up, the maximum reduction in the value of the guarantees under the terms of the Agriculture Act, 1957, would this year be about £22½ million. In fact the effect of this year's determinations is to leave the value of the guarantees virtually unchanged. The saving to the taxpayer, however, will be about £14 million. This is largely because the cost of the milk increase is not met from revenue, and because the change in the pig guarantee arrangements will cause a reduction in the coming year of the cost of this subsidy.

"The cost of agricultural support to the Exchequer has risen steeply in recent years and further changes are needed to bring this cost under more effective control. Accordingly, during the months ahead the Government will be discussing their proposals with the leaders of the industry and with Commonwealth and other countries who supply foodstuffs to this market."

My Lords, full details of the Review will be found in a White Paper which will be available in the Printed Paper Office.

My Lords, I regret to learn that this is the third disagreement year out of four. In view of what has happened previously—in 1955, an election year; in 1959, an election year and in 1963, another election year—I had hoped it would be a very happy party, with full agreement all along the line. I do not mind the noble Lord's intervening, although I am not going to make a speech. It is always difficult to put sen-
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Bible questions until one has had access to the White Paper. However, I should like to ask the noble Lord whether he can answer one other question. What is the sum for increased cost factors this year?

LORD ST. OSWALD

About £12½million. But this is contained in the figure of £25 million for increased efficiency.

And the consumer is called upon to carry the extra ½d. a gallon on milk. How much does that amount to?

LORD ST. OSWALD

I am sorry, but I have not the exact figure with me, and I do not want to mislead the noble Lord. I am not exactly sure what it will amount to annually, but it will add ½d. a pint to the retail price of milk during one month of the year.

My Lords, may I suggest to the noble Lord opposite that this may not be election year, and we may get agreement in election year. whenever that may be. But, with regard to the price of milk, I am sorry the noble Lord, Lord St. Oswald, does not know the additional cost, because I very much wanted to know that myself. He said the ½d.would not add to increased production. I should very much like to know why. I am not against the small farmer in the least, but I do not want over-production, and we do not want milk to be poured away. Whatever the sum is—I think ½d.a pint is correct—it is going to cost a good many millions of pounds to somebody.

LORD ST. OSWALD

No. It is not ½d a pint. It is ½d. a gallon to the producer throughout the year, and ½d. a pint to the consumer during one additional month of the year; that is to say that during eight months in the year instead of the present seven months, milk will cost 8½d. instead of 8d.

My Lords, would the noble Lord not agree that in fact this additional ½d. a gallon is granted by the Government only because milk production is
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likely steadily to go down, and if it went down a great deal further the consumers would have to pay more for their milk?

My Lords, would the noble Lord not agree that the main reason for this great drain on the taxpayers' money by way of subsidy to a large extent comes from unfettered imports of bacon from Denmark and other countries, and cereals from overseas, and that the best way of controlling this great and unknown amount of money can come only from some form of restriction on imports?

LORD ST. OSWALD.

The figures do not show that imports of foodstuffs have increased over recent years.

But the noble Lord will agree that last year, because of incredibly high imports for a very short period of time, costs were somewhere in the region of £78 million, and this might have been prevented if there had been sensible negotiation by supplying nations, including the Commonwealth.

LORD ST. OSWALD

According to my information, the figures have not altered over the years.